GOODWILL FOR HOTEL

New Zealand Herald, Volume LXX, Issue 21466, 13 April 1933, Page 7

GOODWILL FOR HOTEL

EFFECT OF LEGISLATION NO POWER FOR REDUCTION [BY TELEGRAPH —PEESS ASSOCIATION] "WELLINGTON, Wednesday Judgment was given by the Appeal Court to-day in the case of Ernest Charles Heel against Leo Patrick O'Neill, relating to a lease of the Railway Hotel, Inglewood. The question involved was whether a sum. of £3OOO, which had been paid by Mrs. B. O'Neill, the then lessee, in 1929, when a further lease was executed, and which was expressed in the lease to be paid for goodwill, was reducible under the provisions of the National Expenditure Adjustment Act, 1932. The applicant Heel was the owner of the fee simple of the hotel. Mr. Justice' MacGregor, in the Supremo Court, held that the payment had been by way of premium and consequently O'Neill was entitled to a 20 per cent reduction. The appeal was from that decision. The question asked of the Court of Appeal was whether the sum paid by the lessee for the goodwill of the hotel business could be held to be rent paid in respect of land within the meaning of the Act, so as to make applicable the reduction provided for by that Act. The Court held that as the Legislature had not provided that premiums or bonuses or other like payments made in respect of the goodwill of a business should be deemed to be rent, such payments could not come within the words of section 31. For that reason, in the opinion of the Court, the case was wrongly decided in the Court below and the appeal should be allowed, with costs on the middle scale as from a distance.